How to How Can a Two Income Household Pay off debt and Save Money

Many double income families fall into the trap of thinking that there is more money to spend. Consequently, more debt is amassed. If you are in this situation, it is possible to reduce debt and save money but it will take change. In addition, discipline and sacrifice are two words that will become your mantra.

Instructions

1

Create a budget. List all of the necessary expenses, mortgage, car payments, insurance, electricity, gas and water. Make an excel spread sheet or write it down in a notebook to help you keep track of your monthly spending. This is a good time to purge unnecessary bills. Once you have the total for the monthly bills you now can decide which of the two incomes will pay these bills.

2

Pay the monthly bills with the highest monthly paycheck. If that check doesn't cover it all, then take from the second income to pay. The money left over should be put towards savings.

3

Set up saving jars. Labels jelly jars with titles of what you are saving toward. Some saving suggestions are: Retirement, Vacation, Dental work, College fund and Savings. You must place at least 10% of the remaining income in each jar. Don't get discourage if it is only a few dollars. It will add up. Put the jars out of sight to avoid the urge to continuously count or possibly spend the money.

4

Reduce money spent on entertainment and shopping. If you and your wife like to go out for dinner several times a week, consider that you could save more by spending a quiet and intimate evening at home with a home cooked meal. Do more family activities, such as playing board games, and watching a family movie to save more money. Estimate home much money you could save and place that amount into your saving jars evenly.

5

Pay off credit cards with the highest interest rate first, one at a time. For example, if you have two credit cards with balances of $500 and $1000 respectively, send more to the card that has the highest interest and send the minimum payment to the least interest rate credit card. That way, you don't continue to increase your debt with the accruing interest on the outstanding balance. If you can put another bill on hold without penalty to pay off the higher credit card do so.